CANCELLATION OF BENEFITS PROPOSED BY THE CENTRAL BANK OF RUSSIA MAY LEAD TO WAVE OF BANKRUPTCIES

The Central Bank of the Russian Federation announced that from April 1, some of the measures aimed at supporting citizens during the pandemic will cease to operate. We are talking about previously announced recommendations regarding the restructuring of debt on loan obligations to individuals, as well as representatives of small and medium-sized enterprises (SMEs). However, as an economist Anton Lyubich noted, the abolition of benefits by the regulator may in fact lead to wave of bankruptcies.

We should recall that the Central Bank of the Russian Federation introduced a number of measures to counter the pandemic back in April 2020. In particular, this concerned the practice of creating provisions for losses on loans provided by banks for corporate clients. Similar measures in relation to citizens and SMEs will be in force until July 2021.

A year ago, commercial banks were recommended to stop charging a forfeit on those loans that were overdue.

According to Ura.ru, the Central Bank also recommended to temporarily abandon the practice of eviction from the apartments, occupied by unscrupulous debtors, whose property was levied.

It is quite logical, concludes a member of the General Council of Business Russia Anton Lyubich, that the cancellation of such "recommendations" of the regulator may turn into a wave of bankruptcies in practice for those who could not improve their financial situation by April 1, despite the relaxation and benefits. Lubich's opinion is also shared by some other experts, who record the continuing growth of the debt burden of individuals, despite the decrease in the peak growth in bankruptcies of citizens, which was observed a year ago.

Benefits introduced due to the pandemic, according to Lubich, will not immediately turn into a wave of bankruptcies.

Some of the debtors will continue to stay afloat for some time. But the wave of applications in connection with insolvency will begin in April. Therefore, the task of the Government of the Russian Federation should be to develop such mechanisms of targeted support and protection that would allow persons caught in a debt trap to get out of it with the least possible losses, summarize the experts.